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Smart Contracts



CRYPTO CLASS - Smart Contracts


A smart contract is a computer program that automatically executes a transaction when certain conditions are satisfied.

A simple smart contract metaphor is a vending machine. The buyer selects an item, inserts payment and the machine delivers the item.

Smart contracts on the blockchain could include registering a vehicle, sending notifications, issuing a ticket, or even transferring ownership of real estate.

When the transaction is competed, the blockchain is updated. Parties to the contract determine the rules that control the transaction and define a framework for resolving disputes.

There are multiple benefits of a smart contract:

â–¸ Speed, accuracy, and efficiency. The contract is executed immediately after the conditions are met. Since there is no paperwork and no errors to correct, smart contracts are faster and more accurate.

â–¸ Transparency and trust. Since there are no third parties and all documents are encrypted, no one will question whether the information was altered.

â–¸ Security. Blockchain documents are encrypted and distributed. They are safe from hackers because a hacker would need to alter the entire chain to change a single record.

â–¸ Savings. There are no third parties, such as lawyers or banks, involved in the smart contract. This reduces transaction costs.

Ethereum is the most popular smart contract platform.

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